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Matthew provides comprehensive guidance to clients on a wide range of regulatory, transactional, and compliance matters, helping them to advance their operational goals and launch new products and services. His clients include domestic and international traditional and nontraditional banks, as well as fintechs, private equity funds, and payment services firms.

A bank’s positive, cooperative relationship with its banking regulators is particularly important when seeking regulatory approval for significant transactions, including mergers. An effective communications strategy that promotes an open, consistent and prompt flow of information, specific regulatory issues and areas of risk under review is key to maintaining a good relationship before, during and after the application review process.

On June 24, the Office of the Comptroller of the Currency (OCC) announced it is requesting comments on proposed amendments to its recovery planning guidelines. A recovery plan’s purpose is to provide a covered bank with a framework to effectively and efficiently address the financial effects of severe stress events and avoid failure or resolution. Among other things, the proposed amendments aim to expand the guidelines to apply to banks with average total consolidated assets between $100 billion and $250 billion. The proposal also seeks to incorporate a testing standard and clarify the role of non-financial risks in recovery planning.

On May 30, the U.S. Supreme Court unanimously decided Cantero, reaffirming and elaborating on the Barnett Bank preemption standard, and remanding the case to the Second Circuit for further proceedings. Cantero addressed whether a New York law requiring the payment of at least 2% per annum interest on mortgage escrow deposits was preempted by federal law as to national banks. The Supreme Court held that the Second Circuit erred when it failed to apply the preemption standard articulated in Barnett Bank of Marion County, N.A. v. Nelson, which was incorporated by Congress into the Dodd-Frank Act. The Court rejected the lower court’s holding “that federal law preempts any state law that ‘purports to exercise control over a federally granted banking power,’ regardless of ‘the magnitude of its effects.’” The Court also rejected the approach argued by the petitioners, explaining it would “yank the preemption standard to the opposite extreme, and would preempt virtually no non-discriminatory state laws that apply to both state and national banks.”

On May 3, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (collectively, the agencies) released a guidebook aimed at assisting community banks in managing risks associated with third-party relationships (the TPRM Guide). The TPRM Guide builds upon the principles introduced in the third-party risk management guidance for banking organizations issued by the agencies in June 2023 (the June 2023 Guidance, discussed here) as well as the agencies’ community bank guide for conducting due diligence on fintech companies from October 2023 (discussed here) but does not displace or substitute that prior guidance.

There has been a great deal of press about the Federal Trade Commission’s (FTC) vote to ban employee non-competition provisions and policies; see our firm’s fuller discussion here. While the FTC describes the rule as a comprehensive ban, it acknowledges that the rule does not apply to regulated financial institutions, and nonsolicitation clauses are still permitted.

On March 29, a Texas federal court granted a preliminary injunction enjoining the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) from implementing their Final Rule modernizing how they assess lenders’ compliance under the Community Reinvestment Act (CRA). Notably, the court found the plaintiffs demonstrated a substantial likelihood of success on the claim that the Final Rule violates the CRA, indicating how the district court will likely find on the merits.

On March 12, at the Institute of International Bankers Annual Washington Conference, Acting Comptroller of the Currency Michael J. Hsu discussed the importance of operational resilience in the banking sector and hinted that potential regulations aimed to promote the same may be forthcoming.

The Federal Deposit Insurance Corporation (FDIC) recently announced a consent order with Tennessee-based Lineage Bank containing orders relating to the bank’s third-party risk management program and its financial technology (fintech) partners.